Wherefore Pharmacare?

by | Sep 7, 2023 | Take 5 Articles

With less than four months to go for the federal government to table legislation to enact a national pharmacare program in Canada, the silence is deafening.

And Benefits Alliance’s advocacy committee says it’s high time that employers with private drug plans raise their voices to be part of the conversation on what happens next.

In fact, Benefits Alliance is beating the drum that a modernized Canada Health Act needs to be part of the solution—and can help pave the way to universal access to medications. Both federal and provincial governments must also recognize that the sustainability of private drug plans is increasingly at risk due to the growing number of high-cost medications that should be covered, or their costs at least offset, by the public system.

“The Canada Health Act is decades out of date and needs to be modernized to reflect a tectonic shift in the role of medications as a standard of care,” says Todd Stephen, Chair of the advocacy committee and Vice-President, Employee Benefits & Pension at Selectpath Benefits & Financial in Saint John, New Brunswick, a member firm of Benefits Alliance.

Stephen explains that the erosion of medicare in Canada, or the Canada Health Act, began decades ago, for example when private plans began covering anti-rejection drugs for organ transplants since patients were discharged sooner from hospitals. High-cost biologic drugs, infused in private clinics rather than in hospitals, or self-injected, soon followed.

“For me, the ‘aha’ moment was hepatitis C medications,” says Stephen. “Canada had a backlog of hepatitis C patients in the queue for an organ transplant. Then these drugs came out that people could take at home. Plan sponsors picked up the tab of $100,000 per treatment and the public health system avoided million-dollar organ transplants.”

Orally administered oncology medications are a more recent example and help fuel the debate on universal pharmacare. A growing number of these drugs are orally administered, meaning coverage likely lands on private plans first, possibly years ahead of coverage by public drug plans. “Oncology treatment used to start and end with a scalpel. Then there was chemotherapy and radiation in a hospital setting. Now there are oral drugs where patients never set foot in a hospital. Why is the private plan somehow by default the first payer for this new standard of care?” asks Stephen.

Today, it’s not unusual for a plan sponsor to see a third of their healthcare premium go towards paying for high-cost drugs—a situation that did not even exist 30 years ago. “Is that where private health premiums should be in a country with so-called national health care? I think not,” states Stephen. 

Some provinces have taken remedial steps. “B.C., for example, recognized that medicare was falling short by not covering oncology drugs outside of the hospital setting so it created a separate provincial program,” explains Stephen. “Good for them, but now we have a situation where it’s literally better to live in B.C. if you have cancer. This is precisely the type of situation that the Canada Health Act is intended to prevent.”

Absent a formal process for public consultations on pharmacare, Benefits Alliance wrote an open letter to the Right Honourable Prime Minister Justin Trudeau in July to recommend “amending the Canada Health Act to recognize drug therapies, regardless of location of therapy administration.”

Specifically, Benefits Alliance suggested that modernized medicare would be inclusive of:

  • High-cost drugs with an expected treatment cost of more than $25,000 per year;
  • Oncology drugs;
  • Curative drugs (e.g., for hepatitis C); and
  • Fast-track reviews of new high-cost drugs for a more dynamic formulary to prevent Canadians from “resorting to moving to a new province for drug coverage.”

“What we’re trying to communicate is all high-cost medications that are now the standard of care and administered outside the hospital, by definition should be covered by medicare,” says Stephen.

To date, conversations and media coverage around pharmacare have focused on universal coverage and a strategy for high-cost drugs for rare diseases only. “I have yet to hear a single policymaker or politician talk in terms of modernizing the Canada Health Act, even though to do so would create a path for universality and a strategy for rare-disease drugs, without having to reinvent the wheel,” says Stephen.

Where things stand

As part of its Supply and Confidence Agreement with the NDP party, the Liberal government committed to introducing pharmacare legislation by the end of 2023. In June this year, the NDP tabled its version of a Canada Pharmacare Act, which would establish a universal, single-payer pharmacare system, in accordance with recommendations made in 2019 by a government-appointed advisory council.

Soon after the advisory council released its report, the government made preliminary moves by establishing the Canadian Drug Agency, which was tasked with lowering drug prices, creating a national formulary and developing a national strategy for high-cost drugs to treat rare diseases. An initial deadline of January 2022 was set for the national formulary, and a July 2021 report suggested the launch of a national strategy for drugs for rare diseases by the end of 2022. Both deadlines passed quietly, and the government has since issued no formal updates.

The government has also been mum on its model for universal coverage, whether it will be a single-payer system or a “fill-the-gaps” approach that maintains the current hybrid system of public and private drug plans and focusses on insurance for uninsured or underinsured Canadians.

In its open letter to the Prime Minister’s office, Benefits Alliance stated its support of the hybrid model. To get to the next step of universality, it recommends a national framework that sets guidelines for provinces to provide “a drug plan safety net for everyone who does not have private insurance and is not currently afforded coverage via provincial programs.”

“We are 100% in support of no Canadian left behind with respect to access to drug therapies, whether they be low-cost maintenance or high-cost drugs. But again, the bigger issue that doesn’t seem to be getting addressed is how the development of policy for high-cost drugs blurs into the Canada Health Act,” reiterates Stephen.

One of Stephen’s clients, a media company, is attempting to raise awareness with a series of articles. “They’ve got oral oncology meds in their claims experience and are dealing with the cost implications. This has really opened their eyes and they’ve put one of their journalists on it. Benefits Alliance is hoping to parlay that into generating national attention,” says Stephen.

The Quebec example

Benefits Alliance is also seeking to raise awareness of Quebec as a potential model on the two fronts of universality and coverage of high-cost drugs.

In its open letter, Benefits Alliance noted that Quebec’s universal drug plan “works well” by requiring private plans to meet or exceed the province’s drug formulary while also requiring all residents to join a private plan or the public plan.

When it comes to high-cost drugs, the province established the Quebec Drug Insurance Pooling Corporation in 1997 and mandated all insurers to contribute. A private plan pays up to a certain threshold for a high-cost claim depending on the size of the organization (for example, $10,000 per claimant where the total staff count is under 25), and the pool pays the rest.

“The pool’s 25-year track record shows that the model is sustainable,” says Martin Papillon, a member of Benefits Alliance’s advocacy committee and President and CEO of AGA Benefit Solutions in Montreal.

Mandatory participation is key “to prevent plans from playing against the pool by jumping in or out depending on their circumstances,” he notes, adding that such a mandatory pool can be part of the federal government’s initial framework to guide provinces on universal access to therapies.

That said, Quebec’s pool is under strain. “The cost of the pool keeps going up because new drugs are getting more and more costly, and that’s being reflected in premiums,” says Papillon.

Governments need to play a greater role in protecting the sustainability of private plans, he continues, which brings us back to a modernized Canada Health Act. “We don’t need to bring in a whole new pharmacare at a very high cost to taxpayers. What we need is either funding or proper pooling mechanisms supported by government for high-cost drugs.”

Until national guidelines are in place, ideally embedded into the Canada Health Act, Canada cannot rightfully lay claim to provide equitable access to health care, no matter where people live. National employers can attest to that, and it’s becoming harder for them to address the inequities, states Papillon. “Right now, if you fall sick from a severe condition and you’re employed in Quebec, you’re good. But if you’re employed in Ontario, you’re not. The differences in coverage between provinces can be quite shocking. That’s unacceptable.”